We usually get back about $2,000 from the federal government, and we break even with the state.
This year, we owe $1550 to the feds and $920 to the state.
I can't figure out what happened. The only major changes we've had are as follows:
We increased our total income by about $13,000. We're still in the same 25% tax bracket, though.
We switched our retirement contributions. We used to contribute about $8500 a year to our 403b plans, but now we are contributing that amount to our Roth IRAs. (Could that be it?!? I know this is probably what had the biggest impact on our situation, but I didn't think the impact would be THAT significant.)
Still paying a student loan and a mortgage, though the amounts being applied to interest are a little smaller every year.
We "only" paid $6,500 for childcare this year instead of $10,000 like we did in 2007.
Charitable contributions are about the same.
So, do you think the switch to making Roth contributions did us in? I'm guessing it did, but I'm not a numbers person, and I never did the math; I justr assumed it wouldn't have all that significant of an impact.
I just find it ironic that I feel like we're finally doing everything right -- building our emergency fund, living without credit card debt, and diversifying our retirement income so that we'll have both taxable AND tax-free income in retirement, and wham -- we have to pay for it.
I've got some new witholding certificates for us to work on tonight so that this doesn't happen again next year, but I can't help but be kind of disappointed about this year.